Preliminary results for year ended 30 April 2017

RNS Number : 5118K

Accrol Group Holdings PLC

10 July 2017

This announcement contains inside information

10 July 2017

Accrol Group Holdings plc

Preliminary results for the twelve months ended 30 April 2017

Accrol Group Holdings plc, the AIM listed leading independent tissue converter, is pleased to announce its preliminary results for the twelve months to 30 April 2017.

Financial Highlights

· Revenue increased 14.2% to £135.1m (FY16: £118.2m)

· Gross Profit increased 9.3% to £37.7m (FY16: £34.5m)

· Adjusted gross margin⁽¹⁾ was 27.9% (FY16: 28.1%) supported by favourable parent reel pricing and significant currency hedging

· Adjusted EBITDA⁽¹⁾ increased 6.8% to £16.1m (FY16: £15.0m)

· Adjusted profit after tax⁽¹⁾ increased 57.3% to £11.0m (FY16: £7.0m)

· Profit after tax increased 29.3% to £7.4m (FY16: £5.7m)

· Continued strong cash generation in a period which included a £3.6m repayment of loan note interest

· Net debt reduced by £41.7m to £19.0m (Net debt / Adjusted EBITDA reduced from 4.0x to 1.2x)

· Basic EPS of 9p and adjusted EPS of 12p

· Final dividend proposed of 4p per ordinary share giving a total of 6p per ordinary share for the full year

Operational Highlights

· Successful maiden full year as a publicly listed company, with a solid trading performance

· New contract wins have seen market share grow to over 50% of the Discount Sector

· Good progress made in building a platform for future growth

· Key new hires to operations and management functions

· Opened new 168,000 sq. ft. manufacturing facility at Leyland, Lancashire, with two tissue converting lines commissioned and a third line expected in FY18

· Supply Chain Optimisation plan implemented to improve and simplify warehousing and logistics through a 368,000 sq ft. central warehouse at Skelmersdale and managed by NFT Distribution

Steve Crossley, Chief Executive Officer of Accrol, commented:

"This has been a year of positive change for Accrol as we have transitioned to life as an AIM listed company. We have won new contracts and increased our share of the Discount Sector to over 50%."

"We continue to build a platform for future growth, having made a significant investment in our new manufacturing facility at Leyland to create extra capacity. A new finished goods warehouse in Skelmersdale, announced in May 2017, will provide central storage and distribution facilities for our customers, improving our supply chain efficiency and enabling us to build on our market position."

"Increasing input costs, driven by exchange rates, are impacting most product categories in UK retail and like all UK manufacturers, we continue to seek inflation recovery. There are positive signs, with some retailers increasing consumer price points, although it is slower than we expected. We believe that as price increases come through fully in the market, this will continue to drive shoppers to seek good value in the Discount and Multiple own-label sectors.''

Note 1: Non-GAAP measures are reconciled in note 25

There will be an analyst presentation to discuss the results at 9am on 10^th July 2017 at the offices of Camarco. Analysts interested in attending should contact Kimberley Taylor on +44 203 757 4999.

The Company's annual report for the year ended 30 April 2017 (including notice of the annual general meeting to be held at Accrol's Head Office in Blackburn on 6^th October 2017 at 2pm) (the "Annual Report") will shortly be available for downloading from the Company's web site at http://www.accrol.co.uk/investor-relations/.

For further information please contact:
Zeus Capital Limited (Nominated Adviser & Joint Broker)
Dan Bate / Jonathan Sharp	Tel: +44 (0) 161 831 1512
Dominic King / Mike Seabrook / John Goold	Tel: +44 (0) 20 3829 5000
Liberum Capital Limited (Joint Broker)
Clayton Bush / Chris Clarke/ Lucy Sharma / Dominik Götzenberger	Tel: +44 (0) 20 3100 2222
Camarco (Media enquiries)
Jennifer Renwick / Kimberley Taylor	Tel: +44 (0) 203 757 4994

Notes to Editors

Accrol manufactures toilet rolls, kitchen rolls and facial tissues as well as other tissue products. The Company operates out of c. 900,000 sq. ft. of manufacturing, storage and distribution facilities across Lancashire. Accrol currently manufactures approximately 18 million units per week and supplies some of the UK's largest retailers, providing both Accrol branded and Private Label products (being goods produced under a customer's own brand or under a non-branded or less well-known brand name ("private label")).

The Group's competitive advantage lies in its market positioning, operational process and flexibility. Key components of the business model are:

Production process - The Directors believe the Group obtains a competitive advantage through its model of acquiring and converting the large tissue reels that are Accrol's raw materials ("Parent Reels") as opposed to manufacturing Parent Reels from pulp and recycled fibre and subsequently converting. This requires a lower fixed overhead and provides flexibility in Parent Reel sourcing which allows the Group to take advantage of favourable pricing opportunities and production technology advancements, especially in a market of excess supply.

Technology and converting lines - Accrol has invested c.£18.2 million over the last three years with c. £4.0 million committed to a new machine for delivery in March 2018. The Group currently has 17 converting lines in operation providing capacity of approximately 143,000 tonnes per annum. The Group's operating machinery allows conversion of a wide variety of tissue grades, adding flexibility to the Parent Reel sourcing process and allowing manufacture of a wide range of product types.

Manufacturing private label products - The majority of Accrol's products (84 per cent. of revenues in the year ended 30 April 2017) are private label and whilst the Group also develops and supplies branded products, the ability to supply customers with goods under its own brand has allowed penetration into retailers operating in the discount market ("Discounters") and the UK's largest retailers ("Multiples"). Accrol can launch a new private label product within six weeks of instruction from a retailer.

Production flexibility - Accrol is able to manufacture toilet rolls, kitchen rolls, facial tissue and certain products used outside a consumer's home ("Away from Home" or "AFH"), providing a "one-stop shop" solution for customers in the tissue market. The ability to produce these goods and supply Multiples, Discounters, local retailers and wholesalers ("Independents") and the AFH market is a competitive advantage and the Directors do not believe any competitors can offer the same flexibility across all of these market channels.

Macro-economic impact on raw material prices - There is currently a global over-supply of both pulp and Parent Reels, with additional capacity forecast to be brought on stream through to 2019. As such, Parent Reel prices are currently relatively low and are expected to remain so for the foreseeable future. Low Parent Reel prices allow Accrol to manufacture at a lower cost, enhancing margin and providing pricing flexibility to win new orders. Overcapacity drives increased flexibility of supply and provides Accrol with a choice of pricing and technology when sourcing Parent Reels.

Market positioning - Having won a number of contracts with Discounters in recent years and benefitting from the organic growth within this market, the Directors believe Accrol is well positioned to take advantage of the growth in the discount market and Multiples' increased focus on private label products.

Chairman's review

Our maiden year results show a further year of growth

Overview of the year

I am delighted to report that FY17 was another successful year for the Group. Our revenue grew to £135.1million, increasing 14% compared to FY16 and in line with market expectations.

Adjusted EBITDA increased to £16.1million, up 7%, and Adjusted Profit Before Tax increased £4.8 million to £13.0 million, up 58%. Profit After Tax has risen to £7.4 million, up 29%.

With Grocery inflation rising during the year, consumer footfall in the Discount Sector showed no signs of slowing down as shoppers continued to look for ways of offsetting rising household prices and switching to lower cost alternatives. As a result of new contract wins starting in late 2016, our value of market share in the Discount Sector grew to over 50% (FY16: c. 35%), firmly endorsing Accrol as the soft tissue supplier of choice for the sector.

The year was not without its challenges. In anticipation of Sterling weakness and volatility following the UK's decision to leave the European Union, we moved to protect ourselves from adverse exchange rates fluctuations by significantly hedging our exposure to help mitigate raw material cost price increases. However, we have continued to look ahead, positioning ourselves for growth, investing in both our facilities and our team to help us capitalise on the market opportunity.

During the year, we opened our new production facility at Leyland, Lancashire, which gives us the opportunity to install a total of six tissue converting lines and the potential to generate revenues in excess of £100 million from the site, and £250 million in aggregate. We currently have two lines installed and recently announced the addition of a third line which will be installed towards the end of 2018, as we seek to extend our reach into the Major Multiples.

We also embarked on an ambitious plan to reorganise our warehousing and logistics operations, creating a centralised finished goods hub next to the M58 in Skelmersdale, Lancashire. This will enable us to better service our customers and prepare for future growth.

Accrol's founders, the Hussain family, have now fully exited the business in line with the strategy we set out at IPO, and we have made a number of new senior management hires across the business. I would like to thank the Hussain family for a smooth and successful transition to new management.

Strategy and outlook

The continued over supply of Parent Reels shows no sign of abating and as of January 2017, globally a further 111 tissue mills were on order or in their final stages, keeping pricing competitive and supporting our strategy to procure parent reels versus own manufacture. We will continue to source reels from around the globe, taking advantage of new technology and spare capacity.

The majority of Private Label retail shelf prices for soft tissue are still at pre-EU referendum levels. There are positive signs that this is changing, albeit slower than expected, and we expect the industry as a whole to pass on the effects of the weaker pound as currency contracts unwind.

Key to our expansion will be to strengthen our relationships in the growing Discount Sector, the continued consumer shift towards private label tissue products and winning new business in the Multiple Retail Sector. Our recent investment in new production capacity, logistics and warehousing facilities will allow us to build on our strong market position.

Dividend policy

The Board remains committed to a progressive dividend policy. The interim dividend of 2p per share was paid in February 2017. The Board has proposed a final dividend of 4p per share, which together with the interim dividend represents a 6% yield at the IPO listing price.

The final dividend is subject to the approval of the Company's shareholders and will be paid on 11 October 2017 to shareholders on the register on 22 September 2017. The Company's ordinary shares will become ex-dividend on 21 September 2017.

Peter Cheung
Executive Chairman
10 July 2017

Chief Executive Officer's review

Market overview

FY17 has been a year of delivery and positioning for future growth for Accrol, with the UK tissue market currently worth £2.2 billion at retail selling price.

Although there has been a small decline due to promotional activity in the value of consumer sales through Multiples and Discounters, down 1.5% to £1.5 billion, the Discount Sector continues to demonstrate the most significant growth at over 10% per annum. Brands continue to be slowly eroded with Own-Label within the Major Multiples reaching 47% of the total market by March 2017. Inflation, driven by a fall in the value of Sterling following the EU referendum, first appeared in the tissue category in early 2017 and is expected to accelerate as the year continues.

In anticipation of exchange rate volatility immediately ahead of, and following, the EU Referendum, Accrol entered into a significant number of forward contracts to hedge its currency exposure. This, along with favourable parent reel pricing dynamics, enabled Accrol to minimise the impact of foreign exchange rate volatility on its financial performance through FY17. As exchange rates continue to be weak in favour of the US Dollar, tissue manufacturers and convertors are facing rising raw material prices as pulp is traded in US Dollars on global markets. Accrol is well advanced in conversations with customers regarding inflation recovery but they are challenging and will take time to conclude.

Strategy

Throughout the year we have focused on our long-term strategy of increasing our share of the Discount Sector as increasing inflation encourages UK shoppers to search out quality and value and further accelerates the growth of the Discount Sector. Evidence of this can already be seen with Aldi and Lidl both recently reporting market share growth of almost 20%. Increasing product prices will also see further moves in sales from brands into Own-Label within the Major Multiples as they all seek to re-set their ranges and shopper offering. Our aim of gaining further Own-Label business with the Major Multiples therefore also remains a key strategic objective.

Our sourcing strategy of purchasing parent reels globally from partner paper mills will continue to be a key point of difference. Leveraging strong commercial terms, flexibility on sourcing new technologies and better use of cash remain the key advantages of this sourcing strategy as opposed to a vertically integrated model. There is still significant over capacity in the world pulp and tissue markets as new paper mills continue to come online, which appears set to continue through to 2019.

Contracts

We won a number of new contracts in FY17, the most significant being the launch of Lidl's Floralys range in November 2016. The account has continued to trade above the original expected levels of circa £10 million per annum.

Relationships with key customers remain positive and our investment for future growth by increasing capacity and improving our supply chain has been well-received. Our relationship with Booker, Accrol's largest customer, continues to be strong and we have recently signed a new supply agreement.

Conversations with the Major Multiples continued throughout the year and all outlined the need for an increase in Accrol's manufacturing capacity in order to move major tranches of volume, supporting the importance of our continued investment in the business.

Increased input costs driven by exchange rates have prompted inflation recovery conversations and, subsequently, more tender processes across the industry.

Investment

Significant progress has been made on building a platform for future growth during the year. A suitable 168,000 sq. ft. site was quickly identified and secured at Leyland, Lancashire. From moving into the building in late October 2016, the premises were modified for manufacturing use with the 2 converting lines installed from January 2017 onwards. Commissioning on the first line was completed in April 2017 and on the second line in June 2017. Ramp up of volume has continued with the addition of new shift patterns and will continue into FY18. We recently announced the purchase of a further tissue conversion line which will take the total business capacity to 158,000 tonnes for FY18 or circa £200 million per annum sales. The Leyland site has space for a further three conversion lines in addition to the three lines that will be in place.

In addition to laying down new capacity, an investment programme commenced in the year on the existing Blackburn sites to improve operational efficiency, and hence overall capacity. This includes staff training and a new rotating shift pattern that is more employee friendly.

The final part of the investment for growth strategy in FY17 was the implementation of a Supply Chain Optimisation plan to improve and simplify warehousing and logistics, creating additional capacity for growth. A more efficient single 'big shed' solution was adopted and a site quickly identified on the M58 at Skelmersdale in Lancashire. This 368,000 sq. ft. warehouse is newly refurbished and will house finished goods and provide central distribution facilities to all UK customers. Warehouse management and national logistics will be contracted out to a third-party provider, NFT, enabling the Accrol management team to focus on its core competencies of sourcing and manufacturing.

People

Following our IPO in June 2016, a new PLC Board was put in place and a review of our organisational structure was undertaken. Key gaps were identified and have subsequently been filled with highly experienced industry experts. The new team helped transition the Hussain family out of the business by October 2016 as agreed in a collaborative and controlled manner.

People remain our most important asset and further investment continues to be made into their working environment through a focus on equipment and health and safety, into their welfare through more employee friendly rotating shift patterns, and into respecting their views and opinions through employee engagement.

Market opportunities / outlook

The Directors believe that Accrol's strategy remains relevant for the marketplace and that there continue to be opportunities for further growth. The move toward Discounters and Own-Label will be accelerated as shoppers try to reduce the inevitable impact of inflation without compromising on quality. Despite the exchange rate driven inflationary pressures and the slower than expected consumer price increases which the whole industry faces into, the Directors remain confident that when price increases do come though, our sourcing policy and investment in capacity, supply chain efficiency and people has positioned Accrol to take advantage of the marketplace dynamics.

Steve Crossley

Chief Executive Officer

10 July 2017

Chief Financial Officer's review

Continued strong sales, profit and cash growth

Sales of Private Label products into Discounters and Multiples delivered year on year a 14% growth in revenues and a 58% growth in adjusted profit before tax. Net debt reduced by 69% to £19.0m.

Key performance indicators

	2017	2016	Change
	£'000	£'000
Revenue	135,053	118,219	+14.2%
Adjusted gross margin ⁽¹⁾	27.9%	28.1%
Adjusted EBITDA ⁽²⁾	16,061	15,038	+6.8%
Finance costs	1,129	4,941	-77.2%
Adjusted profit before tax⁽³⁾	13,022	8,266	+57.5%
Adjusted profit after tax⁽⁴⁾	10,999	6,992	+57.3%
Free cash flow⁽⁵⁾	7,384	4,696	+57.2%
Net debt	18,988	60,656	-68.7%
Net debt / adjusted EBITDA	1.18 times	4.03 times
EPS - basic	£0.09	£576.26

· Revenues increased by 14.2% to £135.1 million

· Gross profit increased 9.3% to £37.7m (FY16: £34.5m)

· Adjusted gross margin was 27.9% (FY16: 28.1%) supported by favourable parent reel pricing and significant currency hedging

· Adjusted EBITDA increased by 6.8% year on year to £16.1m (FY16: £15.0m)

· Adjusted profit before tax increased 57.5% year on year to £13.0m

· Adjusted profit after tax increased 57.3% year on year to £11.0m

· Continued strong cash generation which included a £3.6m repayment of loan note interest in the current year

· Net debt reduced £41.7m year on year to £19.0m with net debt to adjusted EBITDA reducing from 4.0 times to 1.2 times

· Basic EPS of 9p (FY16: 57,626p)

· Final dividend proposed of 4p per ordinary share giving a total of 6p per ordinary share for the full year

Income statement

	Statutory
	2017	2016
	£'000	£'000	Change
Revenue	135,053	118,219	+14%

Cost of sales before gain / (loss) on derivative financial instruments	(97,374)	(84,996)
Gain / (loss) on derivative instruments	-	1,266
Cost of sales	(97,374)	(83,730)
Gross profit	37,679	34,489	+9%
Administration expenses	(15,698)	(13,138)
Distribution costs	(11,453)	(9,431)
Operating profit	10,528	11,920	(12%)
Analysed as:
- Adjusted EBITDA ⁽²⁾	16,061	15,038	+7%
- Depreciation	(1,910)	(1,831)
- Amortisation	(2,042)	(2,060)
- Gain / (loss) on derivative financial instruments	-	1,266
- Exceptional items	(1,581)	(493)
Operating profit	10,528	11,920	(12%)
Finance costs	(1,129)	(4,941)
Profit before tax	9,399	6,979	+35%
Tax charge	(2,023)	(1,274)
Profit for the year attributable to equity shareholders	7,376	5,705	+29%

Gross margin %	27.9%	29.2%
Adjusted gross margin %	27.9%	28.1%

Note 1: Adjusted gross margin, which is defined as gross profit excluding the (loss) / gain on derivative financial instruments is a non-GAAP metric used by management and is not an IFRS disclosure.

Note 2: Adjusted EBITDA, which is defined as profit before finance costs, tax, depreciation, amortisation, (loss) / gain on derivative financial instruments and exceptional items, is a non-GAAP metric used by management and is not an IFRS disclosure.

Note 3: Adjusted profit before tax, which is defined as profit before tax, amortisation, (loss) / gain on derivative financial instruments and exceptional items, is a non-GAAP metric used by management and is not an IFRS disclosure.

Note 4: Adjusted profit after tax, which is defined as profit after tax, amortisation, (loss) / gain on derivative financial instruments and exceptional items, is a non-GAAP metric used by management and is not an IFRS disclosure

Note 5: Free cash flow, which is net cash flow from operating activities is a GAAP measure used by management.

Revenues

	FY17	FY16	VAR
	%	%	%
Discounter	74%	69%	5%
Multiple	8%	9%	(1%)
Other	18%	22%	(4%)

	100%	100%	0%

Revenues grew by 14.2% or £16.8 million year on year with the majority of the growth coming from the Discounters. The Discount segment of the UK tissue market has increased from 14% to 16%, taking share from the Multiples. In terms of products, toilet tissue revenues showed the highest year on year growth of 27.3% or £14.6m. As a proportion of revenue, toilet tissue has increased from 44% in the prior year to 49% in the current year.

Gross margin

Adjusted gross margin decreased marginally by 0.2% from 28.1% for the year ended 30 April 2016 to 27.9% for the year ended 30 April 2017. Adjusted gross margin excludes the impact of unrealised gains and losses on outstanding forward foreign currency contracts valued at the Balance Sheet date. The decrease of 0.2% is mainly due to:

· In order to reduce the impact of the adverse movements in both the US$ and Euro exchange rates, we entered into a significant volume of forward currency contracts ahead of, and following, the EU referendum, selling Sterling and purchasing both US$ and Euros. This coupled with a favourable parent reel pricing delivered a 0.3% improvement in adjusted gross margin.

· We have continued to invest in production head count to support the sales growth at a cost of 0.5% of adjusted gross margin.

Administration costs

Administrative costs have increased year on year by £2.6m to £15.6m, mainly due to a £1.1m increase in exceptional costs, £0.6m due to increased wage costs as we continue to invest in people to support the sales growth, £0.3m due to plc related running costs and £0.6m due to insurance, depreciation and utilities.

Exceptional costs of £1.6m in the current year relate to AIM flotation costs of £0.2m (balance of £1.6m is included in the share premium account), consulting costs of £0.6m, an early settlement fee on finance leases of £0.4m and the write-off of previous deal related costs attached to the previous debt structure of £0.4m.

Distribution costs

Distribution costs as a percentage of revenue has increased year on year by 0.5% to 8.5%. The increase is mainly due to destination mix change with an increased number of southern depots coupled with an increased usage of packaging materials.

Finance costs

Finance costs have decreased significantly year on year by £3.8m to £1.1m mainly due to the restructuring of the debt at listing on AIM in June 2016. The 10% fixed rate secured manager loan notes, the 10% fixed rate secured investor loan notes and the majority of the finance leases were repaid at listing. A new Revolving Credit Facility of £18.0m was put in place at IPO with a drawdown at IPO of £13.0m.

Taxation

The effective tax rate for the year was 21.5% which is higher than both the standard rate of UK taxation and the prior year (18.3%), primarily as a result of non-deductible expenses, which largely relate to professional and to an element of interest charges on loan notes which are not deductible for tax purposes. The change in the statutory tax rate to 19.92% (2016: 20%) is due to the reduction in the main rate of corporation tax to 20% from 1 April 2016 to 19% from 1 April 2017.

Balance sheet

Property, plant and equipment

In the previous financial period, we acquired two further converting lines at a cost of £3.2m. In the current year, we have installed both of these machines in our new production facility at Leyland. Start-up costs of £3.4m are included in assets under construction with deprecation of the two lines and the start-up costs starting from May 2017.

Intangibles

Intangibles comprise mainly of goodwill and customer relationships. Under IFRS, goodwill is not amortised but is subject to an impairment review on at least an annual basis. Consequently, during the year, the directors performed a review, which involved making assumptions about the future performance of the business. After carefully considering various scenarios that could occur and after looking at sensitivities on these scenarios, the directors concluded that no impairment was required. Customer relationships have been recognised at fair value and are amortised over 10 years.

Working capital

	Actual
	2017	2016	Var
	£'m	£'m	£'m
Inventories	14.4	9.4	5.0
Trade and other receivables	24.7	21.3	3.4
Trade and other payables	(18.8)	(15.5)	(3.3)
	20.3	15.2	5.1

Raw material stocks have increased by £2.1m with the majority of the increase supporting the sales growth, with a smaller element due to us taking spot deals to take advantage of lower parent reel pricing. Finished goods stocks have increased by £2.9m year on year, with last year significantly lower than expected due to higher sales demand around year-end. Finished goods stock levels at 30 April 2017 are of an appropriate level to ensure we provide good service to our customers.

Trade receivables have increased by £3.4m in line with the sales growth, showing our continued tight control of cash collection.

Trade payables have increased £3.3m as we are choosing to take advantage of favourable credit terms on Parent Reels.

Borrowings and cashflow

	Actual
	2017	2016	Var
	£'m	£'m	£'m
Bank loan facility	12.8	3.7	(9.1)
Finance leases	0.5	10.9	10.4
Shareholder loans	-	41.1	41.1
Factoring facility	9.5	7.5	(2.0)
Borrowings	22.8	63.2	40.4
Cash and cash equivalents	(3.8)	(2.5)	1.3
Net debt	19.0	60.7	41.7

As part of the AIM flotation process, shareholder loan notes, bank loan facility and the majority of finance leases were repaid. A new Revolving Credit Facility of £18.0m was put in place with a day 1 draw down of £13.0m. The opening day net debt position following flotation was £23.1m with the above position representing a reduction of £4.1m to 1.18 times the FY17 adjusted EBITDA.

Net cash flows from operating activities increased £2.7m or 57.2% to £7.4m mainly due to higher adjusted EBITDA year on year, lower relative investment in working capital and lower interest paid following the debt restructuring noted above.

Looking forward

After completing our first year on AIM, we are looking forward to consolidating the investments in our new production facility in Leyland and our new distribution centre in Skelmersdale. As before, our goal is to provide shareholder value through the provision of quality products and services to our existing and new customers. The Board has proposed a final dividend of 4p per ordinary share giving a total of 6p per ordinary share for the full year. The Board remains committed to a progressive dividend policy.

James Flude

Chief Financial Officer

10 July 2017

Consolidated income statement for the year ended 30 April 2017


Continuing operations	Note	2017	2016
		£'000	£'000

Revenue	4	135,053	118,219

- Cost of sales before gain on derivative financial instruments		(97,374)	(84,996)
- Gain on derivative financial instruments		-	1,266

Cost of sales		(97,374)	(83,730)
Gross profit		37,679	34,489
Administration expenses		(15,698)	(13,138)
Distribution costs		(11,453)	(9,431)
Operating profit	5	10,528	11,920
Analysed as:
- Adjusted EBITDA¹		16,061	15,038
- Depreciation	10	(1,910)	(1,831)
- Amortisation	11	(2,042)	(2,060)
- Gain on derivative financial instruments		-	1,266
- Exceptional items	5	(1,581)	(493)
Operating profit		10,528	11,920
Finance costs		(1,129)	(4,941)
Analysed as:
- Finance costs on pre-IPO debt structure	8	(478)	(4,456)
- Finance costs on post-IPO debt structure	8	(651)	(485)
Finance costs		(1,129)	(4,941)
Profit before tax		9,399	6,979
Tax charge	9	(2,023)	(1,274)
Profit for the year attributable to equity shareholders		7,376	5,705

Consolidated statement of comprehensive income for the year ended 30 April 2017

	2017	2016
	£'000	£'000
Profit for the year attributable to equity shareholders	7,376	5,705
Other comprehensive (expense) / income for the year
Revaluation of derivative financial instruments²	(2,868)	-
Tax relating to components of other comprehensive income	545	-

Total comprehensive income attributable to equity shareholders	5,053	5,705

Earnings per share
		£	£
Basic and Diluted	6	0.09	576.26
Adjusted	25	0.12	680.20

The notes are an integral part of these consolidated financial statements.

Note 1: Adjusted EBITDA, which is defined as profit before finance costs, tax, depreciation, amortisation, gain / (loss) on derivative financial instruments and exceptional items, is a non-GAAP metric used by management and is not an IFRS disclosure.

Note 2: Items that could potentially be reclassified subsequently to profit and loss

Consolidated statement of financial position for the year ended 30 April 2017

		2017	2016
	Note	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	10	26,914	24,407
Intangible assets	11	29,742	31,744
Total non-current assets		56,656	56,151

Current assets
Inventories	12	14,358	9,361
Trade and other receivables	13	24,670	21,277
Cash and cash equivalents	14	3,867	2,456
Deferred tax asset	9	545	-
Derivative financial instruments	17	841	-
Total current assets		44,281	33,094
Total assets		100,937	89,245

Non-current liabilities
Borrowings	16	13,146	50,919
Deferred tax liabilities	9	4,336	4,478
Derivative financial instruments	17	474	-
Total non-current liabilities		17,956	55,397
Current liabilities
Borrowings	16	9,709	12,193
Trade and other payables	15	18,840	15,454
Income taxes payable		920	909
Derivative financial instruments	17	3,235	190
Total current liabilities		32,704	28,746
Total liabilities		50,660	84,143
Net assets		50,277	5,102

Capital and reserves
Share capital	20	93	13
Share premium		41,597	84
Hedging reserve		(2,323)	-
Capital redemption reserve		27	-
Retained earnings		10,883	5,005
Total equity shareholders' funds		50,277	5,102

The financial statements were approved by the Board of Directors on 10 July 2017.

Signed on behalf of the Board of Directors

Steve Crossley James Flude

Chief Executive Officer Chief Financial Officer

Company Registration Number 09019496

Consolidated statement of changes in equity for the year ended 30 April 2017

	Note	Share capital	Share Premium	Hedging reserve	Capital redemption reserve	(Accumulated losses) / retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000

Balance at 1 May 2015		10	50	-	-	(700)	(640)
Transactions with owners
Issue of ordinary shares		3	34	-	-	-	37
Total for transactions with owners		3	34	-	-	-	37
Comprehensive income
Profit for the year		-	-	-	-	5,705	5,705
Total comprehensive income		-	-	-	-	5,705	5,705
Balance at 30 April 2016 and at 1 May 2016		13	84	-	-	5,005	5,102
Comprehensive income / (expense)
Profit for the year		-	-	-	-	7,376	7,376
Revaluation of derivative financial instruments		-	-	(2,868)	-	-	(2,868)
Tax relating to components of other comprehensive income		-	-	545	-	-	545
Total comprehensive income		-	-	(2,323)	-	7,376	5,053
Transactions with owners recognised directly in equity
Bonus issue of shares	20	64	(64)	-	-	-	-
Proceeds from shares issued	20	43	43,285	-	-	-	43,328
Buy back of deferred shares for consideration of £1	20	(27)	-	-	27	-	-
Transaction costs		-	(1,708)	-	-	166	(1,542)
Dividends		-	-	-	-	(1,860)	(1,860)
Share based payments		-	-	-	-	196	196
Total transactions recognised directly in equity		80	41,513	-	27	(1,498)	40,122
Balance at 30 April 2017		93	41,597	(2,323)	27	10,883	50,277

Consolidated cash flow statement for the year ended 30 April 2017

	Notes	2017	2016
		£'000	£'000
Cash flows from operating activities
Operating profit		10,528	11,920
Adjustment for:
Depreciation	5,10	1,910	1,831
Amortisation	5,11	2,042	2,060
(Gain) on derivative financial instruments		-	(1,266)
Grant income		(212)	(61)
Exceptional items		1,016	-
Share based payments		196	-
Profit on disposal of property, plant and equipment		(26)	(22)
Operating cash flows before movements in working capital		15,454	14,462
(Increase) / decrease in inventories		(4,997)	20
Increase in trade and other receivables		(3,224)	(1,975)
Increase / (decrease) in trade and other payables		6,431	(1,433)
Cash generated from operations		13,664	11,074
Tax paid		(2,149)	(1,460)
Interest paid		(4,131)	(4,918)
Net cash flows from operating activities		7,384	4,696
Cash flows from investing activities
Purchase of property, plant and equipment		(4,417)	(683)
Proceeds from sale of property, plant and equipment		56	48
Net cash flows used in investing activities		(4,361)	(635)
Cash flows from financing activities
Proceeds of issue of ordinary shares		43,328	37
Cost of raising finance		(1,971)	-
Increase in amounts due to factors		2,038	1,656
Repayment of capital element of finance leases		(10,737)	(3,082)
Repayment of bank loans		(3,900)	(1,200)
Receipt of new bank loans		12,730	-
Repayment of shareholder loans / loan notes		(41,240)	-
Drawdown of shareholder loans / loan notes		-	249
Dividend paid to ordinary shareholders		(1,860)	-
Net cash flows (from) financing activities		(1,612)	(2,340)
Net increase in cash and cash equivalents		1,411	1,721
Cash and cash equivalents at beginning of the year	14	2,456	735
Cash and cash equivalents at year end	14	3,867	2,456

Notes to the consolidated financial information

1. General information

The Company's subsidiaries are listed in note 22, which together with the Company form the Accrol Group Holdings plc Group (the "Group").

2. Summary of significant accounting policies

A summary of the significant accounting policies is set out below. These have been applied consistently in the financial statements.

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted for use in the EU, IFRS Interpretation Committee ('IFR IC') interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared on a going concern basis under the historical cost convention, as modified by financial liabilities (including derivative instruments) at fair value through profit or loss. The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest thousand pounds, except where otherwise indicated.

Standards issued not yet effective

At the date of authorisation of this financial information, the following new standards, amendments and interpretations which have not been applied in this financial information were in issue but not yet effective (and in some cases, had not yet been adopted by the EU):

· IAS 16 and IAS 38 amendments - Clarification of Acceptable Methods of Depreciation and Amortisation (effective 1 January 2016)

· IFRS 11 amendments - Accounting for Acquisitions of Interests in Joint Operations (effective 1 January 2016)

· IAS 16 and IAS 41 amendments - Agriculture: Bearer Plants (effective 1 January 2016)

· IAS 27 amendments - Equity Method in Separate Financial Statements (effective 1 January 2016)

· IFRS 10 and IAS 28 amendments - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective 1 January 2016)

· IAS 1 amendments - Disclosure Initiative (effective 1 January 2016)

· Annual Improvements 2012-2014 Cycle (effective 1 January 2016)

· IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2018)

· IFRS 9 Financial Instruments (effective 1 January 2018)

The adoption of these Standards and Interpretations is not expected to have a material impact on the consolidated financial statements of the Group in the year of initial application when the relevant standards come into effect.

IFRS 16 'Leases' is a new standard that has been published and is effective from 1 January 2019 but has not been early adopted by the Group and could have a material impact on the Group financial information. At the time of preparing this financial information, the Group continues to assess the possible impact of the adoption of this standard in future years.

Going Concern

The Directors have made appropriate enquiries and formed a judgement at the time of approving the financial information that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial information.

Consolidation

Subsidiaries

A subsidiary is an entity controlled, either directly or indirectly, by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

§ power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

§ exposure, or rights, to variable returns from its involvement with the investee; and

§ the ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

§ the contractual arrangement with the other vote holders of the investee;

§ rights arising from other contractual arrangements; and

§ the Group's voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

When necessary, adjustments are made to the financial information of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the Board of Directors. The Group's activities consist solely of the conversion of paper products, primarily within the United Kingdom. It is managed as one entity and management have consequently determined that there is only one operating segment.

Segment results are measured using adjusted earnings before interest, tax, depreciation, amortisation, gain / (loss) on derivative financial instruments and exceptional items. Segment assets are measured at cost less any recognised impairment. Revenue is attributed to geographical regions based on the country of residence of the customer. All revenue arises in and all non-current assets are located in the United Kingdom. The accounting policies used for segment reporting reflects those used for the Group.

Revenue

Revenue representing sales to external customers, which is stated excluding Value Added Tax and trade discounts, is measured at the fair value of the consideration receivable for goods supplied.

Revenue from the sale of goods is recognised at the point of dispatch of goods from the warehouse as this reflects the transfer of risks and rewards of ownership.

Revenue is presented net of trade spend, including customer rebates, which consists primarily of customer pricing allowances, listing fees and promotional allowances (overriders) which are governed by agreements with our trade customers. Accruals are recognised under the terms of these agreements, to reflect the expected promotional activity and our historical experience. These accruals are reported within trade and other payables.

Cost of sales

Cost of sales comprise costs arising in connection with the conversion of paper products. Cost is based on the cost of a purchase on a first in first out basis and includes all direct costs and an appropriate portion of fixed and variable overheads where they are directly attributable to bringing the inventories into their present location and condition.

Exceptional items

Items that are material in size or unusual or infrequent in nature are included within operating profit and disclosed separately as exceptional items in the consolidated income statement.

The separate reporting of exceptional items, which are presented as exceptional within the relevant category in the consolidated income statement, helps provide an indication of the Group's underlying business performance.

EBITDA and Adjusted EBITDA

Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA) and Adjusted EBITDA are non-GAAP measures used by management to assess the operating performance of the Group. EBITDA is defined as profit before finance costs, tax, depreciation and amortisation. Depreciation is the write down of fixed assets and amortisation of the write down of customer relationships held in intangibles. Exceptional items and gains / (losses) on derivative financial instruments are excluded from EBITDA to calculate Adjusted EBITDA.

The Directors primarily use the Adjusted EBITDA measure when making decisions about the Group's activities. As these are non-GAAP measures, EBITDA and Adjusted EBITDA measures used by other entities may not be calculated in the same way and hence are not directly comparable.

Foreign currency

Functional and presentation currency

Items included in the financial information are measured using the currency of the primary economic environment in which the Group operates ('the functional currency'). The financial information is presented in Sterling, which is the functional currency of all companies in the Group.

Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the statement of financial position date. All differences are taken to the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Property, plant and equipment

Property, plant and equipment are included at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is calculated to write down the cost of the assets on a straight-line or reducing balance basis over the estimated useful lives on the following bases:

§ Leasehold land and Buildings straight line over term of lease

§ Plant and Machinery 10% straight line, 40% residual value

§ Motor vehicles 30% straight line

§ Fixtures, fittings and office equipment 25% reducing balance

Assets under construction are not depreciated, but transferred into the appropriate asset class when they are ready for use. The estimated useful lives are reviewed at the end of each reporting period and adjusted if appropriate. The carrying values of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.

Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment

losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Customer relationships, customer order books and other

Customer relationships are shown at fair value as part of acquisition accounting. Customer relationships have finite useful lives and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of customer relationships over their estimated useful lives 10 years.

Customer order books relate to order for goods awaiting dispatch at the date of acquisition on 14 July 2014. Amortisation is calculated using the straight-line method to allocate the cost of customer order books over their estimated useful lives up to 1 year.

The other intangible asset relates to a Management Services Agreement between Accrol Papers Limited and Accrol Group Holdings Plc (formerly Accrol Group Holdings Limited). This agreement has an infinite life and therefore is not amortised.

Impairment of non-financial assets

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Assets that are subject to depreciation and amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset belongs. All tangibles and intangibles are allocated to the Group's sole CGU (see note 11).

Any impairment charge is recognised in the income statement in the period in which it occurs. Impairment losses relating to goodwill cannot be reversed in future periods. Where an impairment loss on other assets, subsequently

reverses due to a change in the original estimate, the carrying amount of the asset is increased to the revised estimate of its recoverable amount.

Financial instruments

Financial Assets

The Group classifies its financial assets as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting date, which are classified as non-current assets. The Group's loans and receivables comprise 'trade and other receivables' and cash and cash equivalents in the balance sheet. Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest method. Income from these financial assets is calculated on an effective yield basis and is recognised in the income statement.

Financial liabilities

The Group initially recognises its financial liabilities at fair value net of transaction costs where applicable and subsequently they are measured at amortised cost using the effective interest method. Transaction costs are amortised using the effective interest rate method over the maturity of the loan.

Derivative financial instruments and cash flow hedges

The Group holds derivative financial instruments to hedge its foreign currency exposures. These derivatives, classified as cash flow hedges, are initially recognised at fair value and then re measured at fair value at the end of each reporting date. Hedging instruments are documented at inception and effectiveness is tested throughout their duration. Changes in the value of cash flow hedges are recognised in other comprehensive income and any ineffective portion is immediately recognised in the statement of comprehensive income. Amounts deferred in other comprehensive income are recognised in the statement of comprehensive income in the same period in which the hedged items affects profit.

All derivative financial instruments are initially measured at fair value on the contract date and are also measured at fair value at subsequent reporting dates.

Share based payments

The Group may issue equity settled share-based payments in the parent company to certain employees in exchange for services rendered. These awards are measured at fair value on the date of the grant using an option pricing model and expensed in the statement of comprehensive income on a straight line basis over the vesting period after making an allowance for the number of shares that it is estimated will not vest. The level of vesting is reviewed and adjusted annually.

Leases

Finance leases

Assets funded through finance leases are capitalised as property, plant and equipment, and are depreciated over their estimated useful lives or the lease term, whichever is shorter. The amount capitalised is the lower of the fair value of the asset or the present value of the minimum lease payments during the lease term at the inception of the lease. The resulting lease obligations are included in liabilities net of finance charges. Finance costs on finance leases are charged directly in the income statement on an effective interest rate basis.

Material lease arrangements do not include any contingent rental conditions, options to purchase or escalation clauses. There are no restrictions imposed by these lease arrangements.

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Government grants

Government grants relating to tangible fixed assets are treated as deferred income and released to the income statement over the expected useful lives of the assets concerned. Other grants are credited to the profit and loss account as the related expenditure is incurred.

Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is based on the purchase on a first in first out basis and includes all direct costs and an appropriate portion of fixed and variable overheads. Net realisable value is the estimated selling price reduced by all costs of completion, marketing, selling and distribution. Supplier rebates are credited to the carrying value of inventory to which they relate. Once the inventory is sold, the rebate amount is then recognised in the income statement.

Trade and other receivables

Trade and other receivables relate mainly to the sale of paper products to trade customers.

Cash and cash equivalents (excluding bank overdraft)

Cash and cash equivalents in the balance sheet comprise cash at bank, short-term deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, excluding any bank overdrafts which are disclosed separately within borrowings within current liabilities.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Current taxation

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Income tax relating to items recognised in comprehensive income or directly in equity is recognised in comprehensive income or equity and not in the income statement.

Deferred taxation

Deferred income tax is provided using the liability method on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, with the following exceptions:

· where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

· in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

· deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward tax credits or tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

3. Significant accounting judgements, estimates and assumptions

The preparation of the financial information in accordance with IFRS requires estimates and assumptions to be made that affect the value at which certain assets and liabilities are held at the balance sheet date and also the amounts of revenue and expenditure recorded in the year. The Directors believe the accounting policies chosen are appropriate to the circumstances and that the estimates, judgements and assumptions involved in its financial reporting are reasonable.

Accounting estimates made by the Group's management are based on information available to management at the time each estimate is made. Accordingly, actual outcomes may differ materially from current expectations under different assumptions and conditions.

The estimates and assumptions for which there is a significant risk of a material adjustment to the financial information within the next financial year are set out below.

Critical accounting estimates and judgements in applying the entity's accounting policies

Goodwill and intangible asset impairment

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment based on the recoverable amount of its sole CGU. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a pre-tax discount rate in order to calculate the present value of the cash flows. More information including carrying values is included in note 11.

Customer rebates

The Group provides for amounts payable to customers in relation to rebates and promotional activity. Whilst the Directors do not consider the Group's rebates to be highly complex as they are predominantly volume related, there is judgement required in calculating amounts due, as terms vary by customer.

Accounting for IPO

The successful completion of the IPO has resulted in a significant change in the Group's financing structure, both in terms of equity and debt and has had a significant impact upon the Group financial statements. Accounting for the IPO and in particular for the transaction fees incurred requires an element of judgement as costs determined to be directly related to the IPO are deducted from the share premium account. Non directly related are expensed as incurred.

4. Revenue

The analysis of geographical area of destination of the Group's revenue is set out below:

	2017	2016
	£'000	£'000
United Kingdom	132,184	118,041
Europe	2,869	178
Total	135,053	118,219

Major customers

In 2017 there were four major customers that individually accounted for at least 10% of total revenues (2016: four

customers). The revenues relating to these customers in 2017 were £31,597,000, £14,532,000, £13,981,000,

£12,602,000 (2016: £25,369,000, £14,300,000, £13,769,000 and £12,375,000).

5. Operating profit

Operating profit is stated after charging / (crediting):

	2017	2016
	£'000	£'000
Employee benefit expense	11,857	9,927
Depreciation of property, plant and equipment (included in administration expenses)	1,910	1,831
Amortisation of intangible assets (included in administration expenses)	2,042	2,060
Profit on disposal of property, plant and equipment	(26)	(22)
Operating lease rentals	1,957	1,946
Net foreign exchange losses / (gains)	27	(1,332)
Grants income	(212)	(61)
Auditors' remuneration	311	59
Inventories recognised as expenses	75,947	66,807


Exceptional items
Professional fees relating to the AIM flotation	208	-
Early settlement charges on finance leases	454	-
Acquisition deal fees	352	-
Consultancy fees	567	334
Other	-	159
	1,581	493

The exceptional items are described below:

Year ended 30 April 2017

Professional fees of £208,000 incurred as part of the IPO process have been classified as exceptional as they do not directly relate to the raising of the equity for the AIM flotation so cannot be charged against share premium. In addition, part of the funds raised in the IPO were used to reduce the debt in the business with the majority of the finance leases being repaid which attracted an early redemption charge of £454,000.

Fees totalling £352,000 relating to the acquisition of the Accrol Group in July 2014 by Accrol Group Holdings Limited, were also required to be written off as part of the accounting for the IPO.

Consultancy costs totalling £567,000 were incurred as part of the restructuring. These related mainly to the Hussain Family consultancy, manufacturing consultancy and human resourcing consultancy.

Year ended 30 April 2016

One off consultancy fees totalling £334,000 were incurred in relation to a market, competitor, customer and working capital review to support the growth strategy following the acquisition in July 2014.

In September 2015, there was a fire within the embossing unit of one of the converting lines. The line was back up and running within one week with no disruption to customer orders. The cost of repair was £159,000.

Auditors' remuneration
	2017	2016
	£'000	£'000

Audit services - Company	13	7
Audit services - Rest of group	53	29

Non audit services:
Tax compliance services	11	10
Tax advisory services	9	13
Advice upon IPO	225	-
	311	59

6. Earnings per share

The basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the profit after tax by the weighted average number of shares in issue during the year, adjusted for potentially dilutive share options. The following reflects the income and share data used in the earnings per share calculations:

	2017	2016
	£'000	£'000

Profit for the year attributable to shareholders	7,376	5,705

	Number	Number
Basic weighted average number of shares ¹	85,113,194	9,900
Dilutive share options	1,321,025	-
Diluted weighted average number of shares	86,434,219	-

	£	£
Basic earnings per share	0.09	576.26
Diluted earnings per share	0.09	576.26

Note 1: In the year ended 30 April 2016 and 2017, the basic weighted average number of shares was calculated by excluding the D class of shares (see note 20) as this class is subject to a dividend cap that does not materially impact upon the profit due to the remaining Ordinary equity shareholders.

The share option scheme in operation post flotation is dependent upon share price movements and could therefore result in future dilution of earnings per share.

7. Employee costs

	2017	2016
	£'000	£'000
Employee costs during the year amounted to:

Wages and salaries	10,748	9,171
Social security costs	801	684
Other pension costs	112	72
Cost of employee share schemes (Note 23)	196	-
	11,857	9,927

The average number of employees (including the executive directors) during the year were:

	Number	Number

Production	462	431
Administration	46	29
	508	460

8. Finance costs

	2017	2016
	£'000	£'000

Finance costs on pre-IPO debt structure
Shareholder loans	478	4,099
Finance lease interest	-	214
Amortisation of finance fees	-	143
	478	4,456
Finance costs on post-IPO debt structure
Bank loans and overdrafts	368	158
Finance lease interest	80	144
Interest on factoring facility	160	183
Amortisation of finance fees	43	-
	651	485
Total finance costs	1,129	4,941

9. Income tax expense

Tax charged in the income statement	2017	2016
	£'000	£'000
Current income tax
Current tax on profits for the year	2,165	1,780
Total current income tax	2,165	1,780

Deferred tax
Origination and reversal of temporary differences	(163)	(31)
Change in tax rate	21	(475)
Total deferred tax	(142)	(506)
Tax charge in the income statement	2,023	1,274

The tax charge for the year is higher (2016: lower) than the effective rate of Corporation Tax in the UK of 19.92% (2016: 20%). The differences are explained below:

	2017	2016
	£'000	£'000
Profit before income tax	9,399	6,979
Effective rate	19.92%	20%

At the effective income tax rate	1,872	1,396
Expenses not deductible for tax purposes	130	353
Change in rate	21	(475)
Total tax charge	2,023	1,274

During the year the Group recognised the following deferred tax (assets) / liabilities:

	Accelerated capital allowances	Intangibles	Derivative financial instruments	Other	Total
	£'000	£'000	£'000	£'000	£'000
30 April 2015	1,576	3,734	-	(326)	4,984
Credit / (charge) in year	127	(412)	-	254	(31)
Change in deferred tax rate	(176)	(306)	-	7	(475)
30 April 2016	1,527	3,016	-	(65)	4,478
Credit / (charge) in year	186	(414)	-	65	(163)
Change in deferred tax rate	(18)	39	-	-	21
Credit to equity	-	-	(545)	-	(545)
30 April 2017	1,695	2,641	(545)	-	3,791

The following is the analysis of deferred tax balances for financial reporting purposes:

	2017	2016
	£'000	£'000


Deferred tax assets	(545)	-
Deferred tax liabilities	4,336	4,478
	3,791	4,478

The deferred tax asset was recognized on the loss on cash flow hedges and the credit has been taken to the hedging reserve.

Deferred tax expected to be settled within 12 months of the reporting date is approximately £58,000 (2016: £186,000).

The Finance Act 2016 reduced the main rate of corporation tax to 20% from 1 April 2016 and to 19% from 1 April 2017. A future rate reduction to 18% from 1 April 2020, was substantively enacted on 26 October 2015. A further change to reduce the rate from 1 April 2020 from 18% to 17% was announced on 16 March 2016. This change was substantively enacted as part of the Finance Bill 2016 on 15 September 2016. Therefore, the rate of 20% (2016: 20%) has been reflected in the consolidated financial statements and deferred tax assets and liabilities have been measured at the rate expected to be in effect when the deferred tax asset or liability reverses. Deferred tax has been provided at the rate of 18% as at 30 April 2017 (2016: 18%).

10. Property, plant and equipment

	Leasehold land & buildings	Fixtures & fittings	Plant and machinery	Motor vehicles	Assets under construction	Total
Cost	£'000	£'000	£'000	£'000	£'000	£'000
At 30 April 2015	156	532	19,013	133	4,417	24,251
Transfer	-	-	4,417	-	(4,417)	-
Additions	-	173	162	37	3,152	3,524
Disposals	-	-	(49)	(35)	-	(84)
At 30 April 2016	156	705	23,543	135	3,152	27,691
Additions	-	344	684	46	3,373	4,447
Disposals	-	-	-	(138)	-	(138)
At 30 April 2017	156	1,049	24,227	43	6,525	32,000


Accumulated depreciation
At 30 April 2015	39	86	1,335	51	-	1,511
Charge	10	119	1,626	76	-	1,831
Disposals	-	-	(23)	(35)	-	(58)
At 30 April 2016	49	205	2,938	92	-	3,284
Charge	10	140	1,739	21	-	1,910
Disposals	-	-	(18)	(90)	-	(108)
At 30 April 2017	59	345	4,659	23	-	5,086


Net book value
At 30 April 2017	97	704	19,568	20	6,525	26,914
At 30 April 2016	107	500	20,605	43	3,152	24,407

The net book value of tangible fixed assets includes an amount of £538,000 (2016: £16,052,000) in respect of plant and machinery assets held under finance leases and £nil (2016: £3,152,000) in respect of assets under construction held under finance leases.

11. Intangible assets

	Goodwill	Customer lists	Order book	Other	Total
Cost	£'000	£'000	£'000	£'000	£'000
30 April 2015	14,982	20,427	86	-	35,495
Additions	-	-	-	-	-
At 30 April 2016	14,982	20,427	86	-	35,495
Additions	-	-	-	40	40
At 30 April 2017	14,982	20,427	86	40	35,535


Amortisation
30 April 2015	-	1,623	68	-	1,691
Charge	-	2,042	18	-	2,060
At 30 April 2016	-	3,665	86	-	3,751
Charge	-	2,042	-	-	2,042
At 30 April 2017	-	5,707	86	-	5,793

Net book value
At 30 April 2017	14,982	14,720	-	40	29,742
At 30 April 2016	14,982	16,762	-	-	31,744

The balance for Goodwill, Customer relationships and Order book arose on the Group's Acquisition of Accrol Holdings Limited and are attributed to the sole cash-generating unit ('CGU').

The intangible addition during the year, relates to a Management Services Agreement between Accrol Papers Limited and Accrol Group Holdings Plc which provides a mechanism for a recharge of salary costs between the two entities.

Impairment test for goodwill

Goodwill is monitored for internal management purposes at the Group's sole CGU level. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by the board covering a five year period. Cash flows beyond this period are extrapolated using the estimated growth rates stated in the key assumptions.

The key assumptions used in the value in use calculations are a pre-tax discount rate of 13% (2016: 16%) and a long term growth rate of 2% (2016: 2%). The discount rate is derived from the Group's weighted average cost of capital and is calculated with reference to latest market assumptions for the risk free rate, equity market risk premium and the cost of debt. The values reflect both past experience and external sources of information.

Goodwill is tested for impairment on at least an annual basis, or more frequently if events or changes in circumstance indicate that the carrying value may be impaired. In the years under review management's value in use calculations have indicated no requirement to impair.

Sensitivity to changes in assumptions

The estimates of the recoverable amounts associated with these CGU affords significant head room over the carrying value, consequently only significant adverse changes in these key assumptions would cause the group to recognize an impairment loss.

12. Inventories

	2017	2016
	£'000	£'000
Raw materials	9,090	6,996
Finished goods and goods for resale	5,268	2,365
	14,358	9,361

There are £nil provisions held against inventories (2016: £nil).

13. Trade and other receivables

	2017	2016
	£'000	£'000
Trade receivables	23,751	20,793
Less: provision for impairment of trade receivables	(85)	(85)
Trade receivables - net of provisions	23,666	20,708
Prepayments	1,004	569
	24,670	21,277

The trade receivables balance is aged as follows:

	2017	2016
	£'000	£'000
Less than 1 month	14,048	12,831
Between 1 and 2 months	8,267	7,120
Between 2 and 3 months	988	383
Between 3 and 6 months	448	459
	23,751	20,793

Trade and other receivables which are less than three months past due are not considered impaired unless specific information indicates otherwise. Trade and other receivables greater than three months past due are considered for recoverability, and where appropriate, a provision against bad debt is recognised. There are no trade receivables amounts more than six months past due.

Included in the Group's trade receivables balance are debtors which are past due at the reporting date for which the Group has not provided as there has not been a significant change in the credit quality and the amounts are considered recoverable.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

The movement in the provision for trade and other receivables is analysed below:

	2017	2016
	£'000	£'000
At the beginning of the year	(85)	(62)
Provisions made for receivables impairment	-	(23)
	(85)	(85)

The creation and release of the provision for impaired receivables has been included in administrative expenses in the Income Statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

14. Cash and cash equivalents

	2017	2016
	£'000	£'000
Cash and cash equivalents	3,867	2,456

Cash and cash equivalents earn interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

15. Trade and other payables

	2017	2016
	£'000	£'000
Trade payables	14,892	7,868
Social security and other taxes	1,558	1,947
Accruals and deferred income	1,576	4,613
Deferred government grant income	814	1,026
	18,840	15,454

Trade payables are non-interest bearing and are paid on average within 30 days at 30 April 2017 (2016: 29 days).

Deferred government grant income relates to grants received for purchase of plant and machinery.

16. Borrowings

	2017	2016
	£'000	£'000
Non-current
Bank facility	12,778	2,600
Finance leases	368	7,232
Shareholder loans	-	41,087
	13,146	50,919
Current
Bank facility	-	1,103
Factoring facility	9,523	7,485
Finance leases	186	3,605
	9,709	12,193

Loan maturity analysis:
Within one year	9,709	12,294
Between one and two years	185	4,164
Between two and five years	13,183	5,768
After five years	-	41,240
	23,077	63,466

The following amounts remain undrawn and available		2017	2016
	£'000		£'000
Revolving credit facility	3,000		-
Factoring facility	13,043		9,879
	16,043		9,879

The Group's bank borrowings are secured by way of fixed and floating charge over the Group's assets.

HSBC Revolving Credit Facility agreement ("Bank facility")

At 30 April 2016, the Group had borrowings under a committed bank loan facility of £4 million provided by HSBC plc, a factoring facility of £20 million and finance leases of £8 million. Subsequent to the year end, on 13 June 2016, the bank loan facility and the finance leases have been repaid from a new Revolving Credit Facility ("RCF"). The RCF is a 5 year £18 million facility with a day 1 drawdown of £13 million. The RCF reduces to £10 million subject to the following profile

30 April 2017: £16 million

30 April 2018: £14 million

30 April 2019: £12 million

30 April 2020: £10 million

The minimum drawing is: £500,000 with the maximum number of outstanding drawings at any one time being 10. Interest is charged on the RCF at LIBOR plus a margin of 2.0% subject to the below ratchet:

≥2.0x Net Debt: EBITDA = 2.25 basis points

≥1.5x Net Debt: EBITDA = 2.00 basis points

≥1.0x Net Debt: EBITDA = 1.75 basis points

<1.0x Net Debt: EBITDA = 1.50 basis points

An arrangement fee of 1.5% of the RCF is payable at inception. An annual commitment fee of 40% of applicable margin on any undrawn RCF commitment is also payable. There is no commitment fee or ticking fee arising between signing and Admission. The facility is subject to financial covenants and each of Accrol Group Holdings plc (formerly Accrol Group Holdings Limited), Accrol UK Limited, Accrol Holdings Limited and Accrol Papers Limited will enter into a guarantee and the security each have previously granted in favour of HSBC shall remain in respect of all liabilities arising under the RCF agreement.

HSBC £20 million factoring credit facility ("Factoring facility")

On 8 August 2014 the Group entered into a £20.0 million multi-currency revolving credit facility to provide factoring financing for general working capital requirements for a minimum period of 3 years. Under the terms of this facility the drawdown is based upon gross debtors less a retention with 90% of the remaining debt funded. Each drawing under the facility is repayable within a maximum of 90 days from date of invoice for jurisdictions within the United Kingdom and 120 days for other countries.

Covenants

The Group is subject to financial covenants in relation to the Bank Facility and the Factoring facility. The covenants in relation to the Bank Facility cover the following ratios: a) Interest cover and b) Leverage. The covenants in relation to the Factoring Facility cover the following: a) Debt dilution, c) Disputed debt and d) Tangible net worth. The Group has been in compliance with all of the covenants during the year under review. Breach of the covenants would render any outstanding borrowings subject to immediate settlement.

Finance fees

Finance fees are not included in the Loan Maturity Analysis table. As at 30 April 2017, finance fees relating to the arrangement of the Revolving Credit Facility have been capitalised and are being amortised. As at the 30 April 2016, the finance fees were incurred upon the arrangement of the shareholder loans by the Group's lenders.

The finance fees after amortisation are as follows:

	2017	2016
	£'000	£'000
Finance fees	222	354

17. Financial instruments

Derivative financial instruments

Derivative financial instruments represent the Group's forward foreign exchange contracts. The liabilities representing the valuations of the forward foreign exchange contracts at the year-end are:

	2017	2016
Foreign currency contracts	£'000	£'000
Current assets	841	-
Current liabilities	(3,235)	(190)
Non-current liabilities	(474)	-
	(2,868)	(190)

The fair value of a derivative financial instrument is split between current and non-current depending on the remaining maturity of the derivative contract and its contractual cash flows. The foreign currency swaps are designated as fair value through profit or loss at initial recognition. The fair value of the Group's foreign currency derivatives is calculated as the difference between the contract rates and the mark to market rates which are current at the balance sheet date. This valuation is obtained from the counterparty bank and at each year end is categorised as a Level 2 valuation, see below. The maximum exposure to credit risk is the fair value of the derivative as a financial asset.

Fair value hierarchy

IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of the inputs used in the value measurements:

Level 1: inputs are quoted prices in active markets.

Level 2: a valuation that uses observable inputs for the asset or liability other than quoted prices in active markets.

Level 3: a valuation using unobservable inputs i.e. a valuation technique.

There were no transfers between levels throughout the years under review.

Fair values

The fair values of the Group's financial instruments approximates closely with their carrying values, which are set out in the table below:

	Fair values and Carrying values
	2017	2016
Financial assets	£'000	£'000
Current
Trade receivables	23,666	20,708
Cash and short-term deposits	3,867	2,456
Derivative financial instruments	841	-
Financial liabilities
Current
Borrowings	9,709	12,193
Trade and other payables	18,840	15,454
Derivative financial instruments	3,235	190
Non-Current
Borrowings	13,146	50,919
Derivative financial instruments	474	-

18. Capital and financial risk management objectives and policies

(a) Capital risk management

The Group's objective when managing capital is to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust capital the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the group monitors net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

	2017	2016
	£'000	£'000
Total borrowings	22,855	63,112
Less: cash and cash equivalents	(3,867)	(2,456)
Net debt	18,988	60,656

(b) Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Foreign currency risk

• Interest rate risk

• Liquidity risk

• Credit risk

This note presents information about the Group's exposure to each of the above risks, and the Group's objectives, policies and procedures for measuring and managing risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.

(i) Foreign currency risk

The Group has transactional currency exposures arising from purchases in currencies other than the Group's functional currency. These exposures are forecast on a monthly basis and are monitored by the Finance Department. Under the Group's foreign currency policy, such exposures are hedged on a reducing percentage basis over a number

of forecast time horizons using forward foreign currency contracts.

The Group's largest exposures are the US Dollar and Euro forward contracts. The derivative analysis below had been prepared by reperforming the calculations used to determine the balance sheet values assuming a 1% strengthening of Sterling:

	2017	2016
	£'000	£'000
Euro - (loss)	(79)	-
USD - (loss) / gain	(844)	135
	(923)	135

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's Factoring facility and Bank facility, both of which have floating interest rates.

The Group manages its interest rate risk by holding the majority of borrowings in fixed rate secured loan notes. The exposure to the remaining risk is deemed to be manageable and is reviewed on a continual basis. The Group are not expecting any reduction in interest rates over the next 12 months, the impact of 0.5% increase in interest rates on profit before tax is shown below:

	2017	2016
	£'000	£'000
Change in interest rate	94	56

(iii) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the maturity profiles of financial assets and operational liabilities and by maintaining adequate cash reserves.

The table below summaries the maturity profile of the Group's financial liabilities:

As at 30 April 2017
	Due within	Due between	Due between	Due in more	Total
	1 year	1 and 2 years	2 and 5 years	than 5 years
	£'000	£'000	£'000	£'000	£'000
Borrowings	9,709	185	13,183	-	23,077
Trade and other payables	18,840	-	-	-	18,840
Derivative financial instruments	3,235	474	-	-	3,709
Total financial liabilities	31,784	659	13,183	-	45,626

As at 30 April 2016
	Due within	Due between	Due between	Due in more	Total
	1 year	1 and 2 years	2 and 5 years	than 5 years
	£'000	£'000	£'000	£'000	£'000
Borrowings	12,295	4,163	5,768	41,240	63,466
Trade and other payables	15,454	-	-	-	15,454
Derivative financial instruments	190	-	-	-	190
Total financial liabilities	27,939	4,163	5,768	41,240	79,110

(iv) Credit risk

The Group's principal financial assets are bank balances and cash, trade and other receivables and investments. The group's credit risk is low. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

19. Commitments and contingencies

Operating lease commitments

The Group has entered into leases on commercial real estate. These leases have an average life of 9 years with no renewal option included in the contracts. There are no restrictions placed upon the Group by entering into these leases. The lease expenditure charged to the income statement during the year is disclosed in note 5.

Future minimum rentals payable under non-cancelable operating leases as at the year end, analysed by the period in which they fall due, are as follows:

	2017	2016
	£'000	£'000
Within 1 year	2,821	1,740
Between 1 and 2 years	3,614	1,740
Between 2 and 5 years	10,879	5,220
Greater than 5 years	17,191	6,516
	34,505	15,216

Finance lease commitments

Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments are, as follows:

	2017	2016
	£'000	£'000

Within 1 year	198	3,989
Between 1 and 2 years	192	3,228
Between 2 and 5 years	190	4,617
	580	11,834
Future finance charges	(29)	(997)
Present value	551	10,837

The present value of finance lease liabilities is as follows:

	2017	2016
	£'000	£'000
Within 1 year	184	3,605
Between 1 and 2 years	184	2,963
Between 2 and 5 years	183	4,269
	551	10,837

Capital commitments

	2017	2016
	£'000	£'000
Contracted for but not provided	-	-

20. Share capital and reserves

		2017 £	2016 £
Called up, allotted and fully paid

Ordinary shares of £0.001 each		93,012	-
Class A Ordinary shares of £1 each		-	4,625
Class B Ordinary shares of £1 each		-	4,625
Class C Ordinary shares of £1 each		-	650
Class D Ordinary shares of £1 each		-	2,860
	93,012		12,760

The number of ordinary shares in issue is set out below:

	2017	2016
	Number	Number

Ordinary shares of £0.001 each	93,012,002	-
Class A Ordinary shares of £1 each	-	4,625
Class B Ordinary shares of £1 each	-	4,625
Class C Ordinary shares of £1 each	-	650
Class D Ordinary shares of £1 each	-	2,860

The movements in shares occurred on the following dates set out below:

		Number
31 May 2016
Issue of A Ordinary shares of £1 each		50
Issue of B Ordinary shares of £1 each		50
1 June 2016
Bonus issue of shares 5:1
Bonus issue of A Ordinary shares of £1 each		23,375
Bonus issue of B Ordinary shares of £1 each		23,375
Bonus issue of C Ordinary shares of £1 each		3,250
Bonus issue of D Ordinary shares of £1 each		14,300
Subdivision of shares
Subdivided A ordinary shares of £0.001 each		28,050,000
Subdivided B ordinary shares of £0.001 each		28,050,000
Subdivided C ordinary shares of £0.001 each		3,900,000
Subdivided D ordinary shares of £0.001 each		17,160,000
Re-organisation of shares into one class
Ordinary shares of one class of £0.001 each		49,683,858
Deferred shares of one class of £0.001 each		27,476,142
10 June 2016
Issue of Ordinary shares of £0.001 each		43,328,144
11 July 2016
Purchase of Deferred shares of £0.001 each		27,476,142

On 1 June 2016, a 5:1 bonus issue of shares occurred and subsequent to this, all shares were subdivided into shares of £0.001 each. On the same day, all shares were re-organised into one class of share and then were reassigned to either Ordinary or Deferred class.

On 10 June 2016, further ordinary shares of £0.001 were issued.

On 11 July 2016, all deferred shares were purchased by Accrol Group Holdings plc (formerly Accrol Group Holdings Limited) for £1.

Each holder of the £0.001 Ordinary Shares are entitled to vote at general meetings of the Company. Every holder of an Ordinary Share shall have one vote for each Ordinary Share held.

21. Dividends

	2017	2016
	£'000	£'000
Amounts recognised as distributions to the owners of the parent in the year:
Interim dividend for the year ended 30 April 2017 of 2 pence (2016: £nil) per share	1,860	-
Total distributions to the owners of the parent in the year	1,860	-

Proposed final dividend for the year ended 30 April 2017 of 4 pence (2016: £nil) per share	3,720	-

The proposed final dividend is subject to approval of the shareholders at the AGM and has not been included as a liability in these financial statements. It will be recognised in the shareholders' equity in the year ending 30 April 2018.

22. Related party disclosures

(a) Identity of related parties

The Company's significant shareholders include NorthEdge Capital LP and members of the Hussain family. Phoenix Court Blackburn Limited is a company under the control of the Hussain family providing commercial premises for letting. Alklar Limited is an entity under the common directorship of Peter Cheung, to which payments for Peter Cheung's services as a director for Accrol UK Limited were made. Post the AIM listing, Peter Cheung is now remunerated for his services via payroll. Nisiac Limited is a company under the control of the Hussain family, to which payments for the consulting services of the Hussain family were made.

The subsidiaries of the Group are as follows:

Company	Principal activity	Country of incorporation	Holding %
Accrol UK Limited	Holding company	United Kingdom	100%
Accrol Holdings Limited	Holding company	United Kingdom	100%
Accrol Papers Limited	Paper convertor	United Kingdom	100%

The registered address of all subsidiaries in the Group is the Delta Building, Roman Road, Blackburn, Lancashire, BB1 2LD.

(b) Transactions with related parties

The following table provides the total amounts owed to / (due from) related parties as at the end of each year:

	2017	2016
	£'000	£'000
NorthEdge Capital LP	-	21,704
NorthEdge Capital - GP	-	460
The Hussain family	-	22,126
Alklar Limited	-	270
Nisiac Limited	-	-
Owed to related parties	-	44,560

Opening balance	44,560	44,262
Loans advanced during year	-	249
Interest charged	478	4,099
Purchases	2,003	1,898
Repayments	(47,041)	(5,948)
Owed to related parties	-	44,560

Borrowings	-	41,240
Trade & other payables	-	3,320
Owed to related parties	-	44,560

Note 16 details loan notes net of financing fees.

The following table provides the total amounts of purchases and interest charged from related parties for the relevant financial year:

Transactions
	2017	2016
	£'000	£'000
NorthEdge Capital LP	259	2,129
The Hussain family	241	2,050
Phoenix Court Blackburn Limited	1,744	1,740
Alklar Limited	62	78
Nisiac Limited	175	-
Total	2,481	5,997

Terms and conditions of transactions with related parties

The purchases and loans from related parties are made at normal market prices. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided for any related party payables. Loans from related parties in comparative periods carried interest at 10%. Payments to Phoenix Court Blackburn Limited are in respect of the provision of services. Payments to Nisiac Limited are in respect of the provision of consultancy services.

	2017	2016
	£'000	£'000
Directors' fees	62	72
Salaries	649	709
Share based payments	196	-
Post employment benefit	32	-
	939	781

During the year retirement benefits were accruing to nil directors under defined contribution schemes (2016: nil). The aggregate amount of emoluments paid to the highest paid director was £305,000 (2016: £204,000).

(d) Key management personnel

Key management personnel are considered to be the executive and non-executive directors of the Company. The remuneration of all directors who have been identified as the key management personnel of the group is set out above in aggregate for each of the categories specified in IAS 24 Related Party Disclosures:

(e) Company transactions with its subsidiaries

The Company received dividends from and charged management fees to its' subsidiaries in the current year as summarised in the table below:

	2017	2016
	£'000	£'000
Dividends received	10,000	-
Management fees charged	620	-
	10,620	-

23. Share based payments

The charge for share based payments under IFRS 2 arises under the Management Incentive Plan ("MIP"). The total expense recognised for the year arising from share-based payment was £196,503 (2016: £nil). All of the total share based payments expense arises from transactions accounted for as equity-settled share-based payment transactions.

Movements in the number of share options outstanding and their relative weighted average exercise prices are as follows:

	2017	2017	2016	2016
	Average exercise price in £ per share option	Options (Number)	Average exercise price in £ per share option	Options (Number)
At 1 May	-	-
Granted	1.30	3,052	-	-
Forfeited	-	-	-	-
Exercised	-	-	-	-
Expired	-	-	-	-

At 30 April	1.30	3,052	-	-

Out of the 3,052 outstanding options (2016:nil) nil options (2016: nil) were exercisable. No options were exercised in 2017 (2016: nil).

Share options outstanding at the end of the year have the following expiry date and exercise prices:

			Share options
Grant - vest	Expiry date	Exercise price in £ per share option		2017	2016

2016-2019	10-Jun-23	1.30		3,052	0

				3,052	0

The weighted average fair value of options granted during the period determined using the Black-Scholes-Merton model valuation was £217.5. The significant inputs into the model were the underlying equity value (taken to be the total market capitalisation of Accrol Group Holdings plc on admission), the exercise price of an option (shown above), volatility of 26.95%, divided yield of 6%.

The volatility is based on statistical analysis of the volatility of comparable companies over a 5 year period as the historical data is not available due to Accrol Group Holdings plc's recent listing on AIM.

See note 7 for the total expense recognised in the income statement for share options granted to directors and employees.

24. Events after the balance sheet date

Details of the proposed final dividend are given in note 21. There are no other significant events that have occurred after the balance sheet date.

25. Alternative performance measures

The Group makes use a number of alternative performance measures to assess business performance and provide additional useful information to shareholders about the underlying performance of of the Group

Adjusted earnings per share

The adjusted earnings per share is calculated by dividing the adjusted earnings attributable to ordinary equity holder of the parent by the weighted average number of ordinary shares outstanding during the year. The following reflects the income and share data used in the adjusted earnings per share calculation.

	2017		2016
		£'000	£'000
Earnings attributable to shareholders		7,376	5,705
Adjustment for:
Amortisation		2,042	2,060
Gain on derivatives		-	(1,266)
Exceptional items		1,581	493
Tax effect of adjustments above		(524)	(258)
Adjusted earnings attributable to shareholders		10,475	6,734


		Number	Number
Basic weighted average number of shares¹		85,113,194	9,900
Dilutive share options		1,321,025	-
Diluted weighted average number of shares		86,434,219	-

		£	£
Basic adjusted earnings per share		0.12	680.20
Diluted adjusted earnings per share		0.12	680.20

Note 1: In the year ended 30 April 2016 and 2017, the basic weighted average number of shares was calculated by excluding the D class of shares as this class is subject to a dividend cap that does not materially impact upon the profit due to the remaining Ordinary equity shareholders.

Reconciliation from GAAP- defined reporting measures to the Group's alternative performance measures

Management use these measurements to better understand the underlying business of the Group.

Consolidated income statement
		2017	2016
(a) Adjusted gross margin		£'000	£'000

Revenue		135,053	118,219
Gross profit		37,679	34,489

Gross margin		27.9%	29.2%

Revenue		135,053	118,219
Gross profit		37,679	34,489
Less: gain on derivative financial instruments		0	(1,266)
Adjusted gross profit		37,679	33,223

Adjusted gross margin		27.9%	28.1%


(b) Adjusted EBITDA

Operating profit		10,528	11,920
Adjusted for:
	Depreciation	1,910	1,831
	Amortisation	2,042	2,060
	Gain on derivative financial instruments	0	(1,266)
	Exceptional items	1,581	493

Adjusted EBITDA		16,061	15,038


(c) Adjusted PBT and adjusted PAT

Profit before tax		9,399	6,979
Adjusted for:
	Amortisation	2,042	2,060
	Gain on derivative financial instruments	0	(1,266)
	Exceptional items	1,581	493

Adjusted PBT		13,022	8,266

Taxation		(2,023)	(1,274)
Adjusted PAT		10,999	6,992

Company statement of financial position as at 30 April 2017

		2017	2016
	Note	£'000	£'000
ASSETS
Non-current assets
Investments in subsidiaries	5	41,437	10
Total non-current assets		41,437	10

Current assets
Trade and other receivables	6	7,904	25
Cash and cash equivalents		287	262
Total current assets		8,191	287
Total assets		49,628	297

Current liabilities
Trade and other payables	7	-	200
Total current liabilities		-	200
Total liabilities		-	200
Net assets		49,628	97

Capital and reserves
Share capital	8	93	13
Share premium		41,597	84
Capital redemption reserve		27	-
Retained earnings - opening		-	-
Profit for the year		7,911	-
Total equity		49,628	97

The financial statements were approved by the Board of Directors on 10 July 2017.

Signed on behalf of the Board of Directors

Steve Crossley James Flude

Chief Executive Officer Chief Financial Officer

Company Registration Number 09019496

Company statement of changes in equity for the year ended 30 April 2017

	Note	Share capital	Share Premium	Capital redemption reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000

Balance at 1 May 2015		10	50	-	-	60
Transactions with owners
Issue of ordinary shares	8	3	34	-	-	37
Total for transactions with owners		3	34	-	-	37
Comprehensive income
Result for the year		-	-	-	-	-
Total comprehensive income		-	-	-	-	-
Balance at 30 April 2016 and at 1 May 2016		13	84	-	-	97
Transactions with owners
Bonus issue of ordinary shares	8	64	(64)	-	-	-
Proceeds from shares issued		43	43,285	-	-	43,328
Buy back of deferred share for consideration of £1		(27)	-	27	-	-
Transaction costs		-	(1,708)	-	-	(1,708)
Dividends		-	-	-	(1,860)	(1,860)
Total for transactions with owners		80	41,513	27	(1,860)	39,760
Comprehensive income
Profit for the year		-	-	-	9,771	9,771
Total comprehensive income		-	-	-	9,771	9,771
Balance at 30 April 2017		93	41,597	27	7,911	49,628

Company Cash Flow Statement

		2017	2016
		£'000	£'000
Cash flows from operating activities
Operating profit		9,771	-

Adjustment for:
Exceptional items	3	193	-
Operating cash flows before movement in working capital		9,964	-

(Increase) / decrease in trade and other receivables		(7,879)	25
(Decrease) / increase in trade and other payables		(200)	200
Cash generated from operations		1,885	225
Net cash flows from operating activities		1,885	225

Cash flows from financing activities
Proceeds of issue of ordinary shares		-	37
Dividends paid to ordinary shareholders		(1,860)	-
Net cash flows (used in) / from financing activities		(1,860)	37

Net increase in cash and cash equivalents		25	262
Cash and cash equivalents at beginning of the year		262	-
Cash and cash equivalents at year end		287	262

1. General information

Accrol Group Holdings plc (formerly Accrol Group Holdings Limited), (the "Company") was incorporated in England 30 April 2014 with company number 09019496. It is a public company limited by shares and it is domiciled in the United Kingdom. The registered address of the Company is the Delta Building, Roman Road, Blackburn, Lancashire, BB1 2LD The Company's subsidiaries are listed in note 22 to the consolidated financial statements, which together with the Company form the Accrol Group Holdings plc Group (the "Group"). The Company acts as a holding company for the remainder of the Accrol Group.

2. Summary of significant accounting policies

A summary of the significant accounting policies is set out below. These have been applied consistently during the financial year.

Basis of preparation

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted for use in the EU, International Financial Reporting Interpretations Committee ('IFRIC') interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on a going concern basis under the historical cost convention. The financial statements are presented in pounds sterling and all values are rounded to the nearest thousand pounds, except where otherwise indicated.

The Company has taken advantage of the exemption in Section 408(3) of the Companies Act 2006 not to present its individual Profit and Loss Account and related notes that form part of the approved Company financial statements. The retained profit of the Company is shown in the Statement of Changes in equity.

Standards issued not yet effective

At the date of authorisation of this financial information, the following new standards and interpretations which have not been applied in this financial information were in issue but not yet effective (and in some cases, had not yet been adopted by the EU):